Academic journal article Management Quarterly

Distributed Generation: An Action Plan for Co-Ops

Academic journal article Management Quarterly

Distributed Generation: An Action Plan for Co-Ops

Article excerpt

In the not too distant future, some of your customers will not call the co-op when a distribution line goes down. In fact, there's a good chance they won't even notice that "the power is out." Computers, refrigerators, fax machines, security systems--all these things will be running normally for these customers because they generate their own power on a routine basis.

This is called distributed generation and it marks a significant change in how customers will regularly use new power sources. Cooperative consumers that own back-up generation equipment today rarely use it as distributed generation.

Electric industry restructuring is triggering landmark changes among utilities. But co-op managers should be aware that advances in distributed generation will also produce dramatic changes to the utility business. And, like competition, these technological advances and the changes they bring will come about with no predicable pattern.

The next five years will offer many electric customers the opportunity to supply at least part of their power needs using new highly efficient technologies for distributed generation. Distributed generation is any generation source placed close to the load being served and designed to frequently supply electric service. This typically means at the customer site.

Results from two surveys taken by NRECA in the past three years show that back-up power and distributed generation is taking hold in pockets of the country. For example, there are more than 125 MW of local generation sets at cooperative consumer sites in Florida. Ten of 31 G&Ts reported that either they or some of their customers are using local equipment for distributed generation applications, according to a 1999 NRECA survey.

Today, the internal combustion engine is the undisputed leader of on-site generation, ranging in size from 50 kW to 5 MW. These units are typically added on the customer side of the meter, initially to ensure reliability. Once installed, however, this equipment also offers the distinct advantage of serving as a peak-shaving device to lower the system peak demand. Many co-ops have used this approach to the advantage of equipment owners and the co-op in the hot summer months of 1998 and 1999.

In the 1970s, Congress enacted legislation designed to promote alternative sources of energy That's when distributed generation--wind, solar and a few others--received its first big R&D push. Many co-op mangers no doubt recall the overblown promises made at that time about the potential of wind and solar power. As it turned out, the technology just wasn't ready for daily operation over years of service.

Generation from renewables, particularly wind turbines, are on the cusp of becoming technically and economically viable for some localities. This summer, for instance, a small Alaskan town just north of the Arctic Circle dedicated seven new wind turbines.

The Kotzebue Electric Association, Kotzebue, Alaska, used seed money from NRECA's Cooperative Research Network to raise millions of dollars in funds to build a wind farm, train personnel in wind power and to help transfer this technology to remote Alaskan communities. In the town of Kotzebue, the hybrid diesel/wind system already has dropped electricity costs by several cents per kilowatt-hour. Future upgrades should provide even greater savings. Organizers of the Kotzebue project believe it will demonstrate the reliability and durability of the new generation of wind technologies. Similarly, today's photovoltaics offer distinct advantages over previous solar technologies.

Will Distributed Generation Break Out of Niche Applications?

If you're wondering if distributed generation technology will ever reshape the energy marketplace, the answer is, probably yes. That's primarily because two revolutionary technologies are becoming competitive: fuel cells and microturbines. Large, well-financed, energy equipment developers are making commitments to bring this new technology to market. …

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